Analysts’ Favorites: A Look at the Top 10 Gold Miners

How Wall Street Analysts View Royal Gold

By Annie Gilroy
|
Oct 6, 2017 1:51 am EST

Analyst ratings for Royal Gold

Like Wheaton Precious Metals (WPM), previously known as Silver Wheaton (SLW), Royal Gold (RGLD) is also a royalty and streaming company. It is mostly involved in the acquisition of precious metal royalties in exchange for funding to miners.

It currently has a portfolio consisting of 38 producing properties, 24 development-stage projects, and 130 evaluation and exploration-stage properties. The majority of its exposure is to gold.

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Of the 11 analysts covering Royal Gold stock, 55% of the analysts rate the stock as a “buy,” and 45% rate it as a “hold.” There are no “sell” ratings on the stock.

Having no “sell” ratings is also true of RGLD’s other royalty peers Wheaton Precious Metals, Franco-Nevada (FNV), and Sandstorm Gold (SAND). This trend could be due to the conservative nature of the business, which flourishes even when precious metal prices are weak.

Implied returns

Royal Gold stock’s upside potential is 6.1%, which based on the target price of $91.25. Its stock has significantly outperformed its peers year-to-date. Until September 29, 2017, its stock has risen 35.8% against a 10.9% rise in the SPDR Gold Shares ETF (GLD) and 9.8% returns for the VanEck Vectors Gold Miners ETF (GDX).

RGLD’s operational performance in 2017 has been very strong. The company achieved record revenues of $441.0 million for fiscal 2017 (fiscal year ended June 2017), a 23% increase year-over-year (or YoY).

Its net earnings also increased 56% YoY. Its dividends have also been robust, as the company announced a 5% increase in dividends for fiscal 2017 compared to fiscal 2016.

Valuations

Royal Gold is trading at a forward EV-to-EBITDA1 multiple of 18.3x, a 10.9% discount to the peer average. RGLD has diversified significantly in the last couple of years.

Royal Gold is worth watching, since another accretive acquisition could provide a further catalyst for the stock. Until then, there isn’t much scope for the valuation to rise further until there is a strong positive catalyst.